Do I Need Life Insurance?

Why Do People Get Life Insurance?

People get life insurance policies to protect the people who depend on them financially. When income or support is no longer there, life insurance coverage helps reduce the financial disruption that can follow.

Common reasons include:

• Protecting loved ones from financial hardship by providing money to help maintain stability after a loss.
• Replacing lost income so everyday expenses like housing, food, and utilities can still be covered.
• Covering shared debts and ongoing expenses, such as a mortgage, auto or student loans, credit cards, childcare, or future education costs.
• Paying for final expenses, including funeral and burial costs, without adding financial stress.
• Leaving a financial legacy to support a spouse, children, or other loved ones over time.

At its core, life insurance is about providing financial continuity when someone’s absence would otherwise create uncertainty or strain.

How to Know If You Need Life Insurance Coverage

Many people assume they don’t need a life insurance policy because they don’t have major assets to protect, or because they’re in good health. In reality, life insurance can be helpful whenever your absence would leave someone else with financial responsibility or added strain.

You may want to consider life insurance if any of the following are true:

• Someone depends on your income or financial support, even in part.
• You share a mortgage, loan, or other ongoing financial obligations.
• You want to help protect your family’s day-to-day lifestyle if you’re no longer there.
• Your death would create financial stress for someone you care about.

If any of these apply to you, getting a life insurance policy could be worth exploring. Coverage does not need to be large or complex to make a difference. Even modest policies can help cover key expenses and provide financial breathing room when it matters most.

Who Actually Needs a Life Insurance Policy?

Life insurance matters most when your death would leave someone else with added financial responsibility. Coverage can help replace income, manage shared obligations, or provide support during a transition. 

The examples below show common situations where life insurance is often used:

• Parents and guardians: Life insurance can help cover childcare, education, and everyday living expenses if a parent dies. This applies to both primary income earners and stay-at-home parents, since both contribute financially in different ways.
• Homeowners and people with shared debt: If you share a mortgage, co-signed loans, or other financial obligations, life insurance can help ensure those costs don’t fall entirely on a surviving partner or family member.
• Married couples and domestic partners: Even without children, shared income often supports housing, savings goals, or long-term plans. Life insurance can help a surviving partner maintain financial stability.
• Single adults with dependents: If you financially support aging parents, siblings, or someone with special needs, life insurance can help provide continued care and support after your death.
• Business owners: Life insurance may help protect business partners, support succession planning, or fund buy-sell arrangements to keep the business running smoothly.
• Older adults: Coverage later in life is often used to help pay for final expenses or leave money behind for loved ones, rather than to replace income.
• Younger, healthy adults: Some people choose coverage early to secure lower costs and put protection in place before responsibilities increase.

How Much Life Insurance Do You Need?

The amount of life insurance you need depends on the financial responsibilities your absence would leave behind and how long those responsibilities would last. Coverage often changes over time as income, family needs, and shared obligations evolve.

When reviewing life insurance quotes, consider:

• Who depends on you financially and how much support they would need to maintain stability. This helps clarify what income or expenses would need to be covered.
• How long that support would be needed, such as during child-rearing years, while paying off a mortgage, or through other long-term commitments. Different responsibilities last for different periods of time.
• Your role in the household beyond income alone. Financial contributions can include earnings, shared responsibilities, or support that would need to be replaced in some way (such as caregiving or household support).
• Whether your coverage needs are likely to change over time. Many people adjust coverage as responsibilities grow, shrink, or shift.

Life insurance planning is often flexible rather than fixed. Coverage can be layered, adjusted, or transitioned as your financial responsibilities shift, allowing protection to stay aligned with your life over time.

Read:

• What is Cash Value Life Insurance?
• Life Insurance for Family Members

Which Type of Life Insurance Is Right for You?

Once you’ve decided life insurance makes sense for your situation, the next step is choosing the right type of coverage. Most policies fall into two broad categories: term life insurance, which covers a specific period of time, and permanent life insurance, which is designed to last your entire life. The right option depends on how long your financial responsibilities will last and how you want the coverage to function over time.

Why Term Life Insurance Works for Most People

Term life insurance is often the most affordable and straightforward type of life insurance. It offers coverage for a set period (typically 10 to 30 years) and is designed to protect your loved ones during your prime working and income-earning years. 

Term life insurance is typically a good fit for:

• Young families on a budget: Term life offers higher coverage at a lower cost, making it a practical option for parents looking to protect their children and potentially cover big-ticket items like a mortgage or future college costs.
• People with temporary financial obligations: If you have a loan, mortgage, or other time-bound financial responsibilities, term life can be tailored to match that timeframe.
• Primary breadwinners: If someone depends on your income, term life can help ensure your family isn’t left financially vulnerable if something happens to you.
• People who want a simple solution: Term policies are typically easier to understand and quicker to apply for. Platforms like Ethos offer term coverage with no medical exam required; you’ll just answer a few health questions during the application process.

When Permanent Life Insurance Can Make Sense

Permanent life insurance provides coverage designed to last your entire life and includes a cash value component that can grow over time. The two main types are whole life insurance, which tends to be more predictable, and universal life insurance, which can offer more flexibility in how the policy is structured. While permanent coverage typically costs more than term, it can make sense when lifelong protection or long-term planning is the goal.

Permanent life insurance may be a good fit for:

• People who want coverage that doesn’t expire: Permanent policies stay in force as long as premiums are paid, which can appeal to those who want guaranteed lifetime protection.
• Older adults planning for final expenses: Permanent life insurance is often used to help cover funeral and burial costs so those expenses don’t fall on family members.
• People interested in cash value growth: Permanent policies build cash value that can be accessed later, depending on the life insurance policy type and structure.
• People who want flexibility in how coverage is managed: Some permanent policies allow adjustments to premiums, death benefits, or cash value use as financial priorities change.

Choosing permanent life insurance often comes down to how long coverage is needed and how it fits into your broader financial picture.

Read: What is Direct Term Life Insurance?

Is Life Insurance Through Work Enough?

Many people already have life insurance through an employer, which can be a helpful starting point. However, workplace policies are often designed as a basic benefit, not full financial protection.

Employer-sponsored coverage amounts may be limited, and protection usually ends if you leave your job. Because of that, some people choose to supplement workplace coverage with an individual policy they control, especially if they have shared financial responsibilities or long-term obligations that would outlast a job change.

A workplace policy may play a role, but it’s worth understanding what it does and doesn’t cover before relying on it as your only protection. 

Who May Not Need Life Insurance?

Life insurance can be valuable in many situations, but it isn’t a requirement for everyone at every point in life. If your death would not create a financial burden for anyone else, coverage may not be necessary right now.

You may not need to buy life insurance if:

• You have no financial dependents: If you’re single, don’t have children, and no one relies on your income or support, life insurance may not be a priority.
• You’ve built substantial assets: If your savings and investments are sufficient to cover final expenses and provide for loved ones, you may be able to self-insure instead of carrying a policy.
• You have some coverage through another source: In some cases, employer-sponsored life insurance or existing policies may provide partial protection, though it’s important to understand coverage limits and whether it would continue if your situation changes.

Life insurance needs can change over time. A life policy that isn’t necessary today may become relevant later with new financial responsibilities, shared commitments, or changes in income or family structure.

When Should You Re-Evaluate Whether You Need Life Insurance?

Most people don’t think about life insurance often, but certain changes make it worth revisiting whether your coverage still fits your situation.

It’s a good idea to re-evaluate your life insurance needs after major life events, such as:

• Getting married or divorced
• Having a child or taking on new dependents
• Buying a home or taking on shared debt
• A significant change in income
• Starting, growing, or selling a business
• When children become financially independent

Even without a major life change, reviewing your coverage every year or two can help ensure it still aligns with your responsibilities. Life insurance needs tend to shift over time, and coverage that once made sense may need to be adjusted as circumstances change.

What to Consider When Reviewing Your Coverage

When reviewing life insurance, it helps to focus on the practical details rather than searching for a perfect number. The goal is to understand what role the coverage plays in your overall financial picture.

Key things to consider include:

• Who relies on you financially and to what extent
• The debts or obligations that would remain if you were gone
• How much coverage you already have from all sources
• Who you’ve named as beneficiaries and whether that still reflects your wishes
• What level of premium payment fits comfortably within your budget

Looking at these factors together can help you decide whether your current coverage still works or whether adjustments are needed.